The bigwigs of ecommerce, including Amazon India Head Amit Agarwal, Flipkart Cofounder Sachin Bansal and Snapdeal Cofounder Kunal Bahl joined hands to seek modifications in the draft version of the GST (goods and services tax) law. Ecommerce companies are worried about the tax collection at source (TCS) provision in the GST.
The proposed GST model makes these companies responsible for the collection of taxes on behalf of its sellers and merchants. With GST expected to be finalised by this month, ecommerce rivals for the first time presented a joint front to put pressure on the government.
“The proposal of tax collection at source, directed only at ecommerce marketplaces, in the Draft Model GST Law, will hurt lakhs of small sellers by making online sales expensive and cumbersome for them,“ said Bahl of Snapdeal. “The proposal, while adding needless complexity for the sellers, provides no benefit to the tax authorities and will lead to duplication of information followed by the need for its reconciliation. It is a measure, which goes against the spirit of making India digital and improving the ease of doing business in the country .“
“We remain concerned about the tax collection at source provision which we believe will negatively impact the growth of marketplaces at a stage when the industry is still in its infancy,“ said Amit Agarwal, country head for Amazon India. “There is an urgent need to re-evaluate such an onerous requirement, we are working with the government on this and hope for a favourable resolution.“
Each ecommerce major has more than a lakh of merchants on its platform and they are worried that being in charge of tax collection for these increasing number of sellers is going to be time consuming and cost amplifying process for them. However, tax experts are not convinced by the reaso ning of these ecommerce companies.
“It is going to be difficult for the government to keep track of all these vendors and on the other hand, these ecommerce companies are strategically placed in the marketplace, so the onus falls on them,“ says Agarwal Singhania & Co, Partner, Ankur Agarwal. “While it may increase compliance for these companies, this is a way forward to a transparent economy . These companies are at the forefront of development and it should not be difficult for them to create software for easy compliance."